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Do earlier openings undercut sales?

By Joan Verdon
MCT News Service

Nov. 22, 2013

HACKENSACK, N.J. – America’s biggest retailers are being accused of ruining millions of turkey dinners this year by opening on Thanksgiving. But the All-American tradition most at risk from the ever-earlier store openings is the shopping event that has driven U.S. holiday spending for the past 40 years – Black Friday.

If more shoppers go to the stores on Thanksgiving, as is expected, with more than a dozen major chains opening on the holiday, Black Friday is in danger of becoming Blah Friday.

The numerous Thanksgiving openings represent the first significant shift in the rhythms of the day since the 1990s, when the trend of opening stores before dawn on Black Friday became widespread.

However, Black Friday, contrary to some pronouncements, is far from dead. It was the biggest shopping day of the year in terms of crowds and dollars spent last year and is likely to retain that title this year.

But the Thanksgiving openings could shift enough volume away from Black Friday to make retailers rethink the game plan for what many call the “Super Bowl of shopping.” Thanksgiving openings, analysts said, increase retailers’ costs because of holiday-pay benefits, and spread spending by consumers over an increasingly long, and labor intensive, four-day weekend.

“The question always is: What do you do next? Start on Wednesday?” said retail analyst

Howard Davidowitz. The increasingly earlier start times “just don’t make sense, but the retailers have put themselves in the position where they have to do it,” by linking deals to specific times and trying to grab shoppers first.

“They’ve dug their own grave,” said Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm based in New York.

The National Retail Federation is expecting 33 million people to shop in stores or online on Thanksgiving, compared with 97 million who will shop on Black Friday.

Bill Martin, founder of ShopperTrak, the Chicago company that sells devices that track store traffic and sales, doesn’t expect to be writing the obituary for Black Friday any time soon.

He notes that last year, shoppers spent $11.2 billion on Black Friday, compared with $810 million on Thanksgiving. While Black Friday sales decreased by 1.8 percent, due to a shift to Thanksgiving night, those Thanksgiving sales still are a very small sliver of the holiday pie.

The biggest impact of the expanded Thanksgiving openings this year, Martin said, could be that they cost Black Friday enough sales to cause it to lose its spot as the No. 1 shopping day to the runner-up, Super Saturday, the last Saturday before Christmas, which this year falls on Dec. 21. If that happens, it might cause retailers to question whether the labor costs and heavy discounts on Thanksgiving are worth the price, when a lot of shopping occurs at the last minute.

Super Saturday taking the No. 1 spot “will suggest to retailers there’s plenty of money left at the end of the season,” and the current trend of opening earlier and earlier on Thanksgiving “may become very unattractive and might eventually fade away,” Martin said.

The short holiday shopping season this year – there are only 26 days between Thanksgiving and Christmas, the fewest possible – has retailers believing they need to grab holiday dollars early, analysts said.

Matthew Harding, president of Levin Management, which manages shopping center properties in North Jersey and elsewhere, said Thanksgiving openings are still in the minority among Levin’s tenants, but he is seeing more promotions intended to drive sales at the beginning of the season. A survey of Levin tenants, which include independent mom-and-pop stores as well as national retailers, found that 43 percent of those stores believe the week of Black Friday will be their most important week for consumer spending.

Retail analyst Davidowitz calls the ever-earlier store openings “a comedy of desperation” by retailers. “Does it improve the bottom line? I don’t think so,” he said. “But if you’re a retailer and your competitor does it, you have to do it. If one does it, the other can’t afford to lose market share.”

Retailers expect teenagers and consumers in their 20s and 30s – a coveted demographic group – to embrace Thanksgiving night shopping, and midnight mall openings. Thanksgiving night and midnight hours over the past two years have attracted large numbers of those shoppers.

One potential development from the Thanksgiving store openings, and promotions tied to specific times on Thanksgiving, is shoppers who don’t want to go to the stores on the holiday will look for those deals online, and then become online Black Friday shoppers in the future. It’s better for retailers when customers enter their stores, analysts said, because the in-store shoppers are more likely to browse and make unplanned purchases.

Branding and public relations specialist David Johnson, chief executive of Georgia-based Strategic Vision LLC, believes there will be a public relations backlash against stores that open on Thanksgiving. But retailers say there are enough shoppers who like Thanksgiving openings to make it worthwhile. Walmart, in announcing that its holiday deals will start at 6 p.m. on Thanksgiving, likened Black Friday weekend to the Super Bowl and said it didn’t want to be “starting at halftime” by waiting until Friday.

Johnson believes retailers may pay a bigger price for the Thanksgiving openings than holiday pay for employees. The openings, he said, create sympathy for campaigns by retail workers for better pay and hours. “A consumer might think, ‘If they have to work on Thanksgiving, they should get better pay,’” Johnson said.